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  • European car engine stuttering

    Alexander Gloy

    According to data released by ACEA (European Automobile Manufacturers’ Association)  new passenger car registrations fell 8.9% in August after a decline of 7.8% in July. European car markets are quite diverse; it makes more sense to look at them individually: The PIIGS are firmly in control of the bottom (what’s up with those Nordics, Sweden…

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  • “Who moved my recession?”

    Alexander Gloy

    Lakshman Achutan, ECRI (Economic Cycle Research Institute) made a recession call for the US on September 30, 2011 (and confirmed it multiple times since then). Gary Shilling, titling his August letter “Global Recession”, says “We are already in a global recession.” However, equity markets don’t think so, with the S&P 500 trading less than 10%…

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  • Analyze this: The Fed is not printing enough money!

    Alexander Gloy

    Before you trash me in the comments, hear me out. It started off with Ray Dalio’s “beautiful deleveraging”, which inspired this post. Since the financial crisis, the Fed has increased its balance sheet from $900 billion to $2.9 trillion (red line in below chart). The difference is $2 trillion (or 13% of GDP). When the…

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  • The “beautiful” deleveraging

    Alexander Gloy

    Some of my clients like to challenge my (admittedly gloomy) views, forcing me to think – which isn’t such a bad thing to do. It started off with Cam Hui’s “A Dalio explanation of Evans-Pritchard’s dilemma“. After laying down his strategy on winning the game of Monopoly, Dalio goes on to model the economy onto…

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  • Who wants to own Investment Banks?

    Alexander Gloy

    I went through the latest available 10-Q filings of major US investment banks. I was after the break-down of assets in levels 1-3. As a reminder: Level 1: stuff that has a market price. Level 2: stuff that doesn’t have a market price, but is valued based on similar assets. Level 3: stuff that where…

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  • All roads lead to a disintegration of the Euro

    Alexander Gloy

    Our investment thesis can be summarized as follows: Equities are worthless when associated debt becomes encumbered (risk capital takes the  first loss). Equity is not an asset; it is merely the remainder that is left over once debt is subtracted from assets. Recent GDP growth was possible only thanks to massive deficit spending and monetary…

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  • “Nobody understands debt (but me)”

    Alexander Gloy

    Luckily they are easy to spot: the demagogues, the manipulators and the hired claqueurs. Unfortunately, there is no lack of media willing to provide a platform to perform their insidious game. Take Nobel-prize wielding economist Paul Krugman. In an article for the New York Times (“Nobody understands debt”) from January 1, 2012, he writes: “Through…

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  • The 2-product, 2-customer wonder called Australia

    Alexander Gloy

    Australia is the sixth-largest country (2.9m square miles) on earth, just a tad smaller than the contiguous United States (3.1m). They are a little short on people (22.8m), which comes handy, since they dig up their entire country and sell the dirt to China. Australia has a remarkably low government debt-to-GDP ratio (29% ), low unemployment…

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  • The ghost of the Bundesbank haunting the halls of Brussels

    Alexander Gloy

    In his book “More money than God”, Sebastian Mallaby describes how George Soros received a signal from Helmut Schlesinger (president of Bundesbank at that time), to go ahead and speculate on a devaluation of the Italian Lira and the British Pound. Germany had enjoyed a boost from the integration of Eastern Germany, which, partially due…

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  • The (Euro) answer, my friend, is showing in the bond market

    Alexander Gloy

    Politicians and non-elected maquinistas are still trying to figure out how to make the still-borne EFSF (European Financial Stability Facility) walk, or better, fly. A month after the “miracle of Cannes”, the trumpets of victory over the debt crisis have fallen silent. Instead, the first EFSF bond issue after the G20 summit ended up in…

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